Classification of sunken dredgers under Heading 8908.00 fails where wreck is not fit for breaking up.

Sunken dredgers and scrap recovered from their breaking were held not classifiable under Heading 8908.00 because a wreck sunk during repairs had not become a vessel or floating structure fit for breaking up, and there was no material showing that the wreck or salvaged scrap had acquired the character of marketable excisable goods. In the case of a dredger sold as-is-where-is after use, the record also did not establish when it became liable to reclassification under Heading 8908.00. The classification claim failed, and the demand of duty, penalty and interest was not sustainable.

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Issues: Whether the sunken dredgers and the scrap obtained from their breaking up were classifiable under Heading 8908.00 of the Central Excise Tariff Act, 1985 so as to attract central excise duty, penalty and interest.

Analysis: The dredger that had sunk during repairs had not reached the stage of being a vessel or floating structure fit for breaking up, and there was no material to show that it had acquired the character of a marketable article under Heading 8908.00. A sunken wreck could not be treated as a vessel fit for breaking, and the scrap salvaged from such wreck could not automatically be treated as goods obtained by breaking up ships, boats or other floating structures. In the other instance, the vessel had been disposed of as-is-where-is after its useful life, but the record did not establish when, in law, a used dredger became liable to reclassification under Heading 8908.00. On the facts, the condition for classification under Heading 8908.00 was not satisfied.

Conclusion: The classification under Heading 8908.00 was rejected, and the demand of duty, penalty and interest was not sustainable.

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